As crude oil continues to rise, it’s starting to impact the rack and retail prices, and I’m actually surprised it took so long. Nothing has really changed out there. Mexico is having some production problems, but nothing that would add $25 a barrel. Even Rush Limbaugh stated the other day that it’s just speculation driving crude prices higher.
Imagine you’re at an auction and an object is offered with an approximate value of $60. The bidding is going slowly, then someone in the crowd whispers that the object is one of a kind and all of the sudden, several bidders decide that they are going to own it no matter what it costs them. The bidding goes up and up.
That’s pretty close to what is happening in the oil market today. There is so much fear that there will be a shortage due to the war in Iraq — and now more speculation there may be a war with Iran — that speculators are bidding up the price.
Keep in mind, OPEC didn’t just hold a meeting and say, "Okay the price today is $94-plus and tomorrow we will go up again." Someone out there is starting the whisper campaign and it is really starting to catch on.
Now who do you think will be the biggest beneficiaries of these increases? If you follow the money when you’re talking about price of crude, anyone who has the vast stocks of the crude is making the money. Exxon Mobil, Shell, British Petroleum and Chevron own the crude, and now we can add OPEC, Mexico, Venezuela, Iran, Canada, etc. They’re all making money.
Too often Big Oil is given a pass; recall previous columns where I spelled out some of the assets of Exxon Mobil and the others. Also keep in mind that approximately 40 percent of the crude oil is from American deposits. Why do they have to charge us $94 a barrel for American oil when we all know that a barrel of oil is profitable at $30. Don’t buy into the idea that if we sell American crude cheaper there will be a run on our oil. They turn on the tap and they can turn it off again. It’s about profits—Big Oil profits.
There is another byproduct of all this money flowing so freely. Iran owns vast deposits of oil. This is what funds its military. It’s the same all over the Middle East. It’s in their interest to keep the crude price high.
Locally the rack price has been climbing the past few days, not by a penny or two, but increases of 7 cents a gallon or more daily. That’s why you recently saw the pump prices pass the $3 mark again. Fill your tanks because it looks like it will continue for a while. On Thursday, Mutual was still holding at $3.079, while Speedway is leading the pack to 3.199.
I also want to thank the Clark station on Division Street in Traverse City for bringing back full service again. It’s so nice to pull up to the pumps and have smiling faces greet you, fill your tank, wash the windows and ask if you would like a beverage from inside. I especially want to let Clark know that their man Carl is friendly, courteous, efficient, and does a great job. For all you patrons out there, if we want to keep full service you have to use the service — and don’t forget to tip the attendant.
Keep the questions and comments coming!
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